Friday 6th of March 2015 02:58:15 AM

You buy the Truth, we pay the Price
Sunday, 01 March 2015 21:45 By Dr. Ahmed Heikal
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A lot has been written and said about the potential impact the collapse in global oil prices might have on East Africa’s nascent hydro carbon industry.

After five years of exciting new discoveries, the region had become one of the most promising new exploration frontiers, creating widespread optimism for the region’s economic transformation.  This situation appears to have changed with some oil exploration companies talking about leaving or scaling back operations. Indeed, the current low barrel price has put into question the commercial viability of extracting the oil.

Whilst this scenario appears to paint a very gloomy picture for the East African oil industry going forward, it’s important to note that historically global oil prices are relatively volatile rising and falling in cycles determined by varied interdependent factors. In 2008 for example, the price of a barrel of oil peaked at $147 in July then fell to $35 in December before stabilizing at between $60-80 by mid 2009.

Given that all indications are that East Africa will eventually become an oil-producing region, the real questions that need addressing should be: What measures should the region look at putting in place in order to cushion itself from the future effects of such shocks? Which investment strategy should East Africa follow in order to ensure there is a constant flow of the much-needed capital? And finally, what role should oil play in the region’s future energy mix given the tendency for it to become the primary energy source once it becomes affordable and is available in large quantities?

Sunday, 01 March 2015 21:41 By Mwesigwa Herbert
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Greater collaboration between telecom companies and financial institutions needed

There is a statistic that is so compelling it cannot be missed when it comes to the growth and usage of mobile phones especially in Uganda. In 2003, they were less than two million people with a mobile phone. In 2014, over 19 million own a phone. In a space of a little over a decade, mobile phone use has jumped from 3% to over 50% of the population.

Even more astonishing however, has been the growth of mobile money. The service launched in 2009 has grown from less than one million users in 2009 to over 17 million users in 2014. On the other hand, despite the increase in the number of banks from 14 since the moratorium on licensing commercial banks was lifted in 2007 to 25 currently, the number of Ugandans holding a bank account has largely stagnated between 18-21% of the population which translates to slightly over five million out of an estimated 34 million Ugandans.

To the majority of the population, banks are not easily accessible, convenient, or affordable. For the banks, the fixed costs of setting up branches especially in rural areas means that the venture is usually not cost-effective and therefore not economically viable.

The result of this is an under-banked population that has little or no access to credit, insurance or savings.

Financial inclusion, as defined by the United Nations, is “a financial sector that provides access to credit for all bankable people and firms, to insurance for all insurable people and firms, and to savings and payment services for everyone”.

Therefore, despite the wider accessibility of mobile money countrywide, it should not be construed to mean that the majority of people now have access to all the key ingredients of financial inclusion. Mobile money, in its current form, is essentially a system of sending and receiving money.

Financial inclusion can only be achieved through greater collaboration between the banks and telecommunications companies.

Contrary to popular opinion, the popularity of mobile money does not herald the demise of banks; it is an opportunity for building cross-sector partnerships that will lead to wholesome financial inclusion for Ugandans which is a key component of economic growth.

Some of these partnerships have already been established. For example, some banks offer mobile money services on their ATM platforms, allow depositing of funds on Agent or personal lines etc.

However this is still insufficient progress to bring the 17 million mobile money users into the banking fold. The key for banks is designing products that cater for your average mobile money user.

The major characteristic of a large number of mobile money users is that they transact in low values but with high frequency. For these users, the ability to transact at the lowest possible cost and in whatever amount is critical.

These people at current bank rates are certainly priced out of having a bank account. The price, for example, of transferring money either by EFT or RTGS between banks ranges from about 3,000 to 20,000 shillings. By contrast, sending money on the mobile money platform at the same relatively low values will cost anywhere between 700 to 4000 shillings.

This is where the banks have to innovate and cater for the needs of these low value customers and provide products and services that are tailor-made to suit these needs. Two of the products identified are responsive mobile banking platforms and operationalising the agency banking system. Both of these initiatives can extract lessons from the existing mobile money infrastructure in the country.

The primary role of telecommunications companies is to provide telecommunications services and, whereas mobile money has proved to be a successful disruptive technology, the fundamental focus for telecom firms has not really changed. It only remains to be seen whether banks and the industry regulator can fully utilise the new opportunities created by the mobile money phenomena to drive even greater financial inclusion for the Ugandan population.

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Sunday, 15 February 2015 21:53 By Silver Mugisha
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Paying affordable and fair water prices also helps to promote efficient allocation of homestead resources

A multifaceted discourse has been raging on various platforms of the media regarding water tariffing and how it impacts the socio-economic life of citizens, especially the low income segment. I have observed strong commendations but also some areas of distortion that need ideological discussion. This opinion is aimed at contributing to knowledge about water tariffing as a concept and the status of water tariffs charged by National Water and Sewerage Corporation (NWSC).

The Concept of Water Tariffing: the traditional thinking has, invariably, alluded to water being a basic social good, God-given and a lifeline of mankind that should, if possible, be supplied free of charge to citizens.  Increasingly, this hypothesis has mutated, and rightly so, to regarding water as a socio-economic good that needs some configuration of inputs in order to be delivered as a potable product to citizens, at a convenient location. In other words, water is a social good that is basic to human life but also requires some level of funding to treat it (using chemicals, pumped systems and unit operations), transmit it (through pumping and transmission pipes) and distribute it to customers. Therefore, bringing potable water close to a homestead requires a combination of operating expenditure (OPEX) and capital expenditure (CAPEX) where the latter is predominantly a one-off sunk investment.

The question is: can this entire cost requirement be met by consumers in countries with citizenry of significant low income status? The answer is NO…..some cost has to be met by Government (assisted by development partners, sometimes). This is because, tariffing benchmarks suggest that water prices must be conserving, affordable, fair, enforceable and serviceable (CAFES). In order to comply with this criterion, water tariff must fit within the willingness to pay (WTP) – ability to pay (ATP) limits of the citizens. The quantitative benchmarks (universally accepted) of WTP and ATP are 3 percent and 5 percent of homestead income respectively. This empirical generalisation can be practically verified through a contingency survey; by asking people of various categories, how much they would be willing to pay if they got water services (of good quality) in their vicinity and save on time lost in walking long distances to fetch water (sometimes of unacceptable quality).

Sunday, 01 February 2015 22:06 By Peter Nyanzi
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Poor regulation hampering Uganda’s anti-poverty, corruption fight

Recently, two friends on Facebook posted updates which provoked intense debate. One was a scanned copy of a school fees bank slip, which indicated that the parent had paid Shs1.7 million for a Primary Six pupil. The other related to a family that had paid Shs2 million for a normal delivery at a Kampala hospital.

It was interesting to see many of the contributors to the debates saying they did not see any problem with both situations because ours is a liberalised economy and those who can afford those services go for them in line with the forces of demand and supply, while those who can’t “find their level.”  But shouldn’t there be a basis and parameters for determining the charges to be paid, even in a liberalised economy, especially for indispensable services like health and education? Would a cost-benefit analysis justify the hefty sums that were paid by the new mother and the pupil in comparison to other service providers in the same range? No one knows.

Apparently, the government does not want to get involved under the excuse that this is a ‘liberalised’ free market economy. I want to suggest that the government is shirking responsibility, and exposing citizens to the deadly fangs of capitalism and the ravenous bellies of profiteers. I will contend that every responsible government has a big role to play in protecting vulnerable citizens/consumers from exploitation by the business community.

Sunday, 25 January 2015 22:25 By Joseph Bossa
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With opposition threatening a boycott, Museveni needs an opponent at the national presidential elections

Some things require many words and rims of paper to explain. The consequences of Gen. David Sejusa’s and former Kampala Mayor, Nasser Ssebaggala’s recent political moves do not. ‘’It is elementary, my dear Watson,’’ Sherlock Holmes, that cerebral character in Sir A. Conan Doyle’s detective stories would have said.

This presentation does not require us going into Sejusa and Co’s antecedents and antics first. Whether Sejusa is being his maverick self yet again and Sebaggala is remaining whatever you think he is, their activities have an effect on the Ugandan voter.

The Ugandan voter looking at these two gentlemen is bound to come to one or several of these conclusions: all politicians are the same; they are all in it for themselves; why bother to vote? There is no alternative; gwewalabyeko ye mwaana, which means the same thing as the devil you know (President Yoweri Museveni) is better than the angel you don’t (any other presidential candidate); nothing is likely to change.

The result of any of those conclusions is a low voter turn-out during the expected elections, widespread acceptance of the status quo, resignation and the sapping of the will to resist what is going on. Only one person, Mr Museveni, benefits from any reaction of the voter set out above.


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